Question

When international trade occurs, currency exchange

Select one:

A. is usually a nice option, but rarely required.

B. can be avoided through careful planning.

C. is both necessary and unavoidable.

D. cannot take place unless both parties are coerced.

Which of the following will lead an American to exchange U.S. dollars for British pounds?

Select one:

A. Importing a case of British beer

B. Purchasing a cottage in the British countryside

C. Investing in the stock of a British firm

D. All of the above

An inflow of U.S. dollars to the U.S. Balance of Payments account will occur when

Select one:

A. the U.S. buys foreign currency in international markets.

B. the U.S. donates foreign aid to other countries.

C. the U.S. exports merchandise to foreign countries.

D. all of the above.

The merchandise trade deficit indicates a net outflow of U.S. dollars as the result of

Select one:

A. importing more foreign goods than the U.S. exports to other countries.

B. long-term foreign investment in the U.S. being less than the U.S. invests abroad.

C. exporting more foreign goods than the U.S. imports from other countries.

D. too few charitable contributions made by foreigners to U.S. citizens.

Under a system of floating exchange rates, which of the following conditions would tend to cause the Canadian dollar to appreciate in value against the U.S. dollar?

Select one:

A. Canadian banks offer lower rates of interest than U.S. banks.

B. The rate of inflation in Canada is lower than in the U.S.

C. There is a rising demand for U.S. goods on the part of Canadian consumers.

D. Canadians perceive that the U.S. is about to experience higher economic growth.

All else held constant, the near-term result of a decrease in the exchange value of Country A's currency against Country B's currency would most likely

Select one:

A. increase A's exports to B.

B. decrease B's trade deficit with A.

C. increase B's exports to A.

D. decrease B's imports from A.

f the U.S. sells $150 million of wheat to Brazil in return for $200 million of Brazilian oil, the $50 million difference will necessarily

Select one:

A. be balanced by other transactions in the U.S. Balance of Payments account.

B. never be paid back, resulting in a $50 million loss for Brazil.

C. require the sale $50 million more wheat to Brazil later on.

D. obligate the U.S. to provide $50 million in foreign aid to Brazil.